Blinded By Natural Science

For at least the past hundred years, economists have attempted to forge an alliance with the natural sciences. The goal: for economics to develop theories supported by and substantiated with mathematics. The attraction is alluring; mathematics ups the bona fides quotient with the certitude that numbers impart. Like their counterparts in the natural sciences, economists have taken mathematics to sometimes bewildering, Greek-lettered heights. But simple is more expedient, as John Maynard Keynes discovered. Keynes mathematically distilled the world to Y (income) = E (expenditures), and then expanded Y to C (consumption) + I (investment) + G (government spending). These three components are distinguishable by their level of stability: stable (C), unstable (I), and stabilizing (G). Keynes postulated that if demand for a firm's output or worker's services were higher, the firm or worker could sell more output without lowering prices by raising output. If demand falls, there is little...(Read Full Article)

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